Wintermute: AI Sector Draining Liquidity, US Selloff Pressure Dominates Market, Bitcoin Entering High Volatility Price Discovery Phase

**Wintermute Comment (Feb 10): Bitcoin Dips to $60k, Erases Trump-Era Gains** Bitcoin fell to $60,000 last week, wiping out all gains since the Trump election. Spot flows signal **significant structural pressure**: Coinbase’s premium has stayed in negative territory (persisting since December 2023), pointing to long-term U.S. selling pressure. Internal OTC data confirms U.S. counterparties were the dominant sellers last week—trend amplified by ongoing ETF redemptions. Over recent months, AI-linked assets have steadily absorbed market capital, crowding out other asset classes. The correlation is clear: crypto underperforms as AI stocks rise, and crypto losses are amplified—nearly all tied to capital rotating into AI. For crypto to regain outperformance, AI trading must cool first. Microsoft’s soft earnings report kickstarted this shift, but it’s far from sufficient. Last week’s market saw a **“surrender-style” liquidation**: volatility spiked, and buy orders emerged at $60k. With spot volume still muted, leverage is the main driver of price swings. Without a meaningful recovery in open futures positions, the market will struggle to sustain follow-through for either longs or shorts. True structural repair depends on spot demand returning—but there’s little evidence of that right now. We’re likely entering a period of high volatility and choppy price discovery. Sustained upside is unlikely until three key triggers: Coinbase premium turns positive, ETF flows reverse, and basis rates stabilize. Retail investors have shifted focus to other assets, while market direction is increasingly driven by institutional flows from ETFs and derivatives.